Thursday, July 26th, 2018


Facebook’s reality check sends stock reeling

WASHINGTON, July 26 — It has turned into a brutal reality check for Facebook. The social network star — which had weathered storms over privacy and data protection — is now looking ahead at a cloudier financial future that threatens to end its…

Khazanah shake-up as directors quit

PETALING JAYA: The en bloc resignation of Khazanah Nasional Bhd's board of directors could have a major impact on the investment direction and strategy of the fund itself.

“It probably will have some impact, maybe a major one, as Khazanah has been a major player in the stock market. We shall wait and see who are the people that are coming in. It depends on the new people to guide the philosophy and direction,” Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew told SunBiz.

The strategic investment fund confirmed today that all its directors, including managing director Tan Sri Azman Mokhtar, have offered to resign from the board after criticism by Prime Minister Tun Mahathir Mohamad over its role.

It said in a statement that the resignation will facilitate a smooth and orderly transition under the new government.

“The current board has been honoured to serve, and feel it appropriate to offer the new government the discretion and reaffirm the prerogative to form the new board. We will issue a further statement once we have further details of the reconstitution of the board.”

Besides Azman, other Khazanah directors are Tan Sri Md Nor Md Yusof, Tan Sri Mohamed Azman Yahya, Datuk Mohammed Azlan Hashim, Raja Tan Sri Arshad Raja Tun Uda, Tan Sri Andrew Sheng Len Tao, Datuk Seri Nazir Abdul Razak, Datuk Nirmala Menon and Yeo Kar Peng.

JF Apex Securities head of research Lee Chung Cheng opined that the market is not overly concerned by the Khazanah shake-up, judging from the local bourse's movement, which held up steadily today.

“From the market's performance, I don't think the market will react negatively to the news.”

At market close, the FBM KLCI was 2.45 points or 0.14% higher at 1,766.23 points on 3.03 billion shares done. The ringgit, however, weakened 0.05% to 4.0620 against US dollar today.

Early this month, Prime Minister Tun Mahathir Mohamad took a swipe at Khazanah, saying the fund should go back to one of its core purposes of helping the bumiputras.

Khazanah was incorporated on Sept 3, 1993 during the leadership of Mahathir to manage commercial assets owned by the federal government as well as design strategic investments that would contribute to nation building.

It reported an 84.7% leap in profit before tax to RM2.89 billion in 2017 from RM1.57 billion in 2016. Some of its major holdings include CIMB Group Holdings, Telekom Malaysia, Axiata, IHH Healthcare and Tenaga Nasional.

Last year, Khazanah undertook 14 new investments last year totalling RM6.3 billion as well as 12 divestments that gave RM6.4 billion in proceeds and gains on divestments of RM2.5 billion. It is embarking on a five-year Transformation 2.0 Programme to bring the investment fund to greater heights.

Guan Eng: Khazanah board’s quit decision their own, a smart move

KUALA LUMPUR: The decision by the entire Khazanah Nasional board of directors to resign was done on their own accord, according to Finance Minister Lim Guan Eng, who also described it as a smart move.

Lim said he believed the decision was made to allow Prime Minister Tun Dr Mahathir Mohamad to name his own new line-up under the Pakatan Harapan administration.

“I think it is their own decision to leave, and I feel they want to give the prime minister a chance to make his own decisions in the direction of Khazanah, whether he wants to maintain with the board appointed by the previous government or appoint a new one.

“I think it id a smart move on their part to give this choice to the prime minister,” he told reporters when met at the Parliament lobby here today.

On whether the matter was discussed or would be brought up in the coming Cabinet meeting, Lim said: “It was not discussed. This is their (board members) decision to leave.”

He added that it is now up to Mahathir to make the final decision on the new line,up considering he is the premier.

It is believed that Khazanah's board's resignation was in response to Mahathir's recent criticism over the management of government-linked companies (GLCs) in the country.

He had previously said that although GLCs inevitably lose money, the salaries of their top executives were very high and they enjoyed these perks without bothering about the company's profitability.

Our president & CEO is still on board, says Prasarana

PETALING JAYA: Prasarana Malaysia Bhd has thrown support behind its president and group CEO Masnizam Hisham, refuting allegations that she has tendered her resignation or that her tenure has been cut short.

However, it was reported that Prasarana chairman Tan Sri Khalid Abu Bakar has stepped down from his position.

In a statement today, Prasarana said its board of directors expressed full confidence in Masnizam, her leadership in running the firm and the various initiatives that she has undertaken since assuming her role on Jan 18, 2018. She is on a three-year tenure.

“The board also expressed regret with reports by the media; which the board felt was mischievous and uncalled for, especially authoritative source was not disclosed and when various transformation measures were being undertaken in the interest of the group especially on the much-highlighted LRT Line 3 (LRT3) project,” it said.

Prasarana said its senior management submitted a detailed historical report on LRT3 to the board last Friday, which was subsequently sent to the Finance Minister.

“In the letter to the minister, Prasarana had also reaffirmed that the organisation would stand guided by the government's decision on the way forward for the project, in the interest of the rakyat and in uplifting further the standard of public transport systems and services in Greater Klang Valley,” it added.

Masnizam, who replaced Datuk Seri Azmi Abdul Aziz as president and group CEO, was instructed by the board to report to the group's chief integrity officer, who is a seconded officer from the Malaysian Anti-Corruption Commission, to investigate any anomaly in the procurement process for the project.

Local property market to pick up, says Knight Frank

PETALING JAYA: The property market saw a “gentle” recovery in the first half of 2018 and is expected to pick up with more enquiries and investment activities in the second half of 2018 and 2019, said Knight Frank Malaysia.

Knight Frank Malaysia managing director Sarkunan Subramaniam said foreign investors are expected to return in the first quarter of 2019 on the back of more transparent policies with the new government.

“Rents of high-end condominiums will stabilise and prices will hold. As for the office market, rents will remain competitive due to oversupply in certain locations, with the exception of Penang, which has a robust office market with limited existing and incoming supply.

“The industrial and logistics sector is primed for growth into 2019 as Malaysia continues to draw healthy levels of investment in the manufacturing and services sectors,” he said in a statement today.

According to the Real Estate Highlights 1st Half of 2018 research report by Knight Frank Malaysia, there were some notable commercial investments which will continue to strengthen the property market.

As for the residential market, residential sales and leasing associate director Kelvin Yip noted that market sentiments improved in 1H2018 while buyers and investors are genuinely seeking good bargains now.

“Developers are now becoming more aggressive in promoting their products by conducting nationwide roadshows. Based on the current trend, we expect the residential market to record more transactions in 2H2018,” he said.

Executive director of corporate services Teh Young Khean said rail infrastructure within Greater Klang will continue to drive demand for office space in established and upcoming decentralised office locations.

He said the segment will continue to see active enquiries and leasing activities from co-working operators exploring new set-up or expansion in prime office buildings, in tandem with rising demand for flexible work space.

Meanwhile the retail market, which was subdued in 1H2018, is expected to show clear signs of recovery in 2019 if the economy performs well in 2H2018.

Associate director of retail leasing and consultancy Rebecca Phan said e-commerce will not disrupt the retail and shopping mall industry as it is unable to offer experiential shopping and suggested that mall operators invest more in entertainment and service-related trades.

Talam Transform doesn’t expect turnaround in next two years

KUALA LUMPUR: Loss-making Talam Transform Bhd does not expect a turnaround in the next two years due to the soft property market, but will continue with its business rationalisation and operational management focus to improve its financial performance.

“Most of our problems (have been) resolved, now we're slowly coming up, we still need one to three years to get it right,” executive director Chua Kim Lan (pix) told reporters at its AGM here today.

The strategic thrust of the property developer is to leverage on its existing 782 acres of landbank in Selangor, with an estimated gross development value (GDV) of almost RM6 billion. It also plans to go into industrial warehousing and develop retirement homes in Bukit Beruntung.

Talam, which has been in the red since FY15, is emerging from its financial difficulties and wants to build a sustainable business on the strength of its expertise and experience in the affordable homes niche.

Chua said the group's revenue for the financial year ending Jan 31, 2019 (FY19) will be driven by its construction profit, selling of completed property units in Bukit Beruntung, Ulu Kelang and Putra Perdana, and its RM124 million worth of asset sales pending completion.

“We don't expect a very big turnover for FY19. Now the property market is quite bad,” she said, adding that its construction revenue may even overtake its property development contribution in FY19, but maintained that property development will still be its core business moving forward.

To mitigate the challenging times, Chua said Talam has construction contracts in hand, in which the group has secured RM127 million of construction contracts to be completed over the next two years, and has embarked on build-and-sell projects.

The property developer has started two build-and-sell projects. The first is 192 units of apartment in Putra Perdana with a GDV of RM35 million, targeting completion by mid June 2019. The second is 100 units of 2½-storey superlink house in Ukay Perdana, with a GDV of RM90 million, targeting completion by the third quarter of 2020.

Meanwhile, the group updated that it has extended the agreement with purchaser Jilin Province Zhuo Yue Investment Co Ltd to dispose of its 85% stake in Chinese unit Jilin Province Maxcourt Hotel Ltd for RMB84.66 million (RM55.60 million).

“We've extended the agreement, waiting for the buyer to finalise their financing. Certainly we're disposing of it,” said Chua.

In February, it was announced that the group terminated the agreement with the purchaser due to the failure of the purchaser to obtain approval from Jilin's Trade and Industry Bureau on the proposed deal.

Pantech to challenge US Department of Commerce’s preliminary finding

PETALING JAYA: Pantech Group Holdings Bhd said it is working closely with its appointed legal counsel to challenge the US Department of Commerce's (DoC) preliminary determination concerning carbon steel butt-weld fittings from Malaysia.

The DoC had on July 20 preliminarily determined that Malaysian companies are circumventing the antidumping duty (AD) order on butt-weld fittings from China.

As a result, Pantech said, carbon steel butt-weld fittings having an inside diameter of less than 14 inches exported by its unit Pantech Steel Industries Sdn Bhd (PSI) to the US are subject to a cash deposit rate for estimated AD duties of 182.90% ad valorem, based on the duty rate in effect on carbon steel butt-weld fittings from China.

Calling the DoC's decision “unjustified”, Pantech told the stock exchange that PSI is taking all possible legal steps to reverse this preliminary determination.

Pending further developments in the DoC investigation, the group noted that PSI has suspended all shipments of carbon steel butt-weld fittings having an inside diameter of less than 14 inches to the US.

Pantech estimated that there could be a 20% reduction in the group's revenue for the remaining months of this financial year.

“PSI strongly views this decision as unjustified and contrary to applicable US law. PSI has never intentionally circumvented the antidumping duty order concerning China and believes that all of its fittings exported in Malaysia should be classified as originating in Malaysia and entered without AD duties.”

PSI has production facilities of about 32,000 sq m, including factories and warehouses, located on about 50,000 sq m of land in Meru, Selangor. It has been producing up to 21,000 tonnes of carbon steel butt-weld fittings a year in Malaysia, which are exported.

BRICS nations pledge unity against US trade war threat

JOHANNESBURG, July 26 — Five of the biggest emerging economies today stood by the multilateral system and vowed to strengthen economic cooperation in the face of US tariff threats and unilateralism. The heads of the so-called BRICS — Brazil,…

SGX offers Malaysian sukuk issuers connectivity to global investors

KUALA LUMPUR, July 26 — Malaysian corporate sukuk issuers should use the Singapore Exchange (SGX) to attract international investors due to its position as Asia’s biggest debt securities listing hub. SGX Head of Fixed Income Trading Rehan Ahmad…

US, EU to ‘immediately resolve’ steel, aluminium tariffs, says Mnuchin

WASHINGTON, July 26 — The United States and the European Union will “immediately resolve” their dispute over US steel and aluminium tariffs and subsequent EU counter-measures, US Treasury Secretary Steven Mnuchin said today, as the two sides…